A Critical Look at the Expansion of Banking Services Through the Business Correspondent Model: Observations from Andhra Pradesh

Abstract

We study the role of Business Correspondents in the current day expansion of banking services in Chittoor, Kurnool and Mahabubnagar Districts of Andhra Pradesh. Our objective is a critical look at the Reserve Bank of India attempt of “ensuring greater financial inclusion and increasing the outreach of the banking sector” through the Business Correspondent Model initiated in the Reserve Bank of India, 25 January 2006 circular. Although our observations from the field are by no means readily generalisable to entire India or to any other country, they might shed some light on what have been accomplished and what have been not through the Business Correspondent Model, at least, in the said districts of Andhra Pradesh. We then make some policy suggestions based on our observations from the field. Our main proposition is that the Individual Business Correspondents can be more effective than the other types of Business Correspondents in expanding financial inclusion through the Business Correspondent Model, at least, in Andhra Pradesh.